What is DYSL's Intrinsic value?

Dynasil Corporation of America (DYSL) Intrinsic Value Analysis

Executive Summary

As of June 10, 2025, Dynasil Corporation of America's estimated intrinsic value ranges from $1.72 to $2.76 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $2.76 +49.2%
Discounted Cash Flow (5Y) $1.72 -7.2%
Dividend Discount Model (Multi-Stage) $2.02 +9.0%

Is Dynasil Corporation of America (DYSL) undervalued or overvalued?

With the current market price at $1.85, the stock appears to be moderately undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Dynasil Corporation of America's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.35 0.45
Cost of equity 5.5% 7.4%
Cost of debt 5.0% 5.0%
Tax rate 26.2% 27.0%
Debt/Equity ratio 0.22 0.22
After-tax WACC 5.2% 6.7%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 5.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $44 (FY09-2019) to $82 (FY09-2029)
  • Net profit margin expansion from -1% to 4%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $2 $32M 87.8%
10-Year Growth $3 $47M 75.3%
5-Year EBITDA $2 $36M 89.4%
10-Year EBITDA $3 $49M 76.3%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 6.4%
  • Long-term growth rate: 2.0%
  • Fair value: $2.02 (9.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.4% (Low) to 5.5% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $(0) to $(1)
  • Selected fair value: $-0.58 (-131.4% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $28M
Enterprise Value $34M
Trailing P/E 0.00
Forward P/E 105.37
Trailing EV/EBITDA 9.60
Current Dividend Yield 29.62%
Dividend Growth Rate (5Y) -19.81%
Debt-to-Equity Ratio 0.22

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 40% $0.83
Discounted Cash Flow (5Y) 33% $0.43
Dividend Discount Model (Multi-Stage) 27% $0.40
Weighted Average 100% $2.21

Investment Conclusion

Based on our comprehensive valuation analysis, Dynasil Corporation of America's weighted average intrinsic value is $2.21, which is approximately 19.7% above the current market price of $1.85.

Key investment considerations:

  • Strong projected earnings growth (-1% to 4% margin)
  • Conservative capital structure (Debt/Equity of 0.22)

Given these factors, we believe Dynasil Corporation of America is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.